April 30, 2011

Beyond Just A Big Deal

There has been much surprise, and some anguish in Washington, Stockholm and, presumably, Moscow over the decision by the Ministry of Defence to shortlist the Dassault Rafale and the Eurofighter Typhoon in the multi-billion dollar medium multi-role combat aircraft (MMRCA) competition. In particular, the rejection of both American bids—of Boeing for its F-18, and of Lockheed Martin for its F-16—surprised many who had expected the decision to go American, and thus further consolidate military-technological ties between the United States and India. The belief was that a defence acquisition on this scale would be a political decision, and that there was limited strategic utility in India’s courting the favour of Western Europe or Russia. Further, many saw a decision to buy American as a quid pro quo of sorts for Washington’s providing India an exception on international civilian nuclear commerce as part of the landmark nuclear agreement between the two countries (“a 123-for-126 trade-off” in the words of one foreign diplomat in Delhi). Certainly, the allure of the MMRCA deal helped many promoters of the U.S.-India relationship in Washington push harder for close ties.

So what happened?

First, the air force, for whom the decision was of primary importance, deemed the American aircraft less than perfect for its purposes. The Eurofighter Typhoon and the Dassault Rafale reportedly performed better than the others in high-altitude trials at Leh. Last year itself, media reports suggested the Eurofighter was the frontrunner, and Indian newspapers confirmed months ago that the Typhoon and Rafale had made the cut.

Second, the spectre of corruption proved a double-edged sword for U.S. suppliers. American manufacturers and the U.S. government were fully confident that the comparative transparency of their defense sales process would give them an edge over their Russian and European competitors, still reeling from the legacies of HDW, the Gorshkov and Bofors. However, the corruption scandals still raging in India also made it near impossible for the results of technical trials to be overruled by India’s political leaders on non-technical grounds.

Third, although the reliability of the United States as a supplier post-sales may have been over-exaggerated, the United States was not seen as flexible enough on access to technology. European governments positioned themselves as far more accommodating on high technology access and were more willing to tailor their bids to assuage Indian concerns. With both the Eurofighter (the product of a multinational consortium) and the Rafale (which has yet to be exported), the likelihood of India becoming a de facto partner in joint production and development could be far greater. Washington was also seen as overly stringent on end-use monitoring, and the Indian government had been previously criticised—perhaps unfairly—for compromising Indian interests on that score.

Finally, American strategic ambiguity played a role. The notion perpetuated by Washington, especially by the current administration, of continued American relative decline resulted in a prevailing impression that the United States is a losing investment over the long-term, even among those favourably inclined towards Washington. Furthermore, the general drift in relations between the United States and India since 2008 has only increased both countries’ resolves to drive harder bargains.

So, what now? New Delhi must first bank on the fact that this decision will have a blowback effect in Washington, providing ammunition to the many sceptics of U.S.-India relations. Equally, India must impress upon the United States that the MMRCA is not the only major defence deal on offer, and that American suppliers have steadily encroached upon the fast-growing Indian defence market. In fact, this decision ought to lead to some soul-searching on the part of the U.S. government and U.S. industry as to where they fell short.

Lastly, to keep this decision in perspective, we should remember that neither the Eurofighter nor the Rafale are bad choices. Both are advanced 4.5-generation aircraft that provide India access to top-of-the-line technology. Among the contenders, the Eurofighter in particular is high-speed, designed for air-superiority, has excellent infra-red tracking capabilities, and adheres extremely closely to the original Indian request for proposals (RFP). Its high cost is certainly a concern, as is the availability of spare parts, but one welcome takeaway from the MMRCA process is that cost alone did not determine India’s choice in acquiring a major weapon platform, when all too often it had been the default determining factor.